Why tech stocks move on things that have nothing to do with tech.

A company's share price is, in essence, a claim on its future profits. The question is when those profits arrive.

A mature business earning steady cash today has most of its value in the near term. A fast-growing technology company earns comparatively little now, and its value rests on large profits expected many years out. It is, in the jargon, long duration.

Now bring in interest rates. Future money is worth less than money today, and the discount you apply depends on interest rates. When rates rise, distant profits get discounted more heavily — and if almost all of your value is distant profits, that hurts disproportionately.

That is the whole mechanism. Tech isn't fragile or irrational; it's simply the most rate-sensitive part of the equity market, for a mathematical reason. Which is why an inflation print that shifts rate expectations can move a software company that has nothing to do with inflation.

The second force: narrative and concentration

Two amplifiers sit on top of the rates mechanism:

• Narrative. Technology is where markets do most of their dreaming — cloud, mobile, AI. When a narrative strengthens, multiples expand; when it wobbles, they contract, often faster. Multiple expansion is not the same as earnings growth (see the wiki), and confusing the two is expensive.
• Concentration. A handful of mega-cap technology companies now make up a large share of major indices. That means "the market" and "big tech" have become uncomfortably close to the same thing — and it means your index fund is probably a bigger tech bet than you realise (which is worth checking).